It's worst ever October for markets in 29 years – Economic Times

Banks have gone bust, jobs have been cut and stock markets are taking a pounding the world over. And in India, this is the worst October in the 29 years that the 30-share benchmark Sensex has seen.

In sheer percentage terms, this is the worst fall the Sensex has seen in a less than 30-day period, from 13,006 to 10,170 points, a drop of 21%.

According to available data, this is the worst performance recorded by the bellwether index since it was started in 1979. A similar drop was witnessed in the Octobers of 1992 and 2000, when the Sensex fell by 10-1%.

In 1992, it was on account of the securities scam and in 2000, the collapse was triggered by the burst of the dotcom bubble. The other years when the market recorded a poor performance in the same month were 2005 (a fall of 9.3%) and 1990 (9.2%).

October 2008 was marked by seven 500+ point crashes. During the month, index heavyweight Reliance Industries saw a fall of 30% in its stock price, while other blue-chip constituents such as ICICI Bank (which fell 21%), Bharti (12%) and HDFC (10%) have also taken a hit. October has also seen the worst performance in terms of percentage losses for a month in the year 2008. Mind you, the month still isn’t over, five trading days remain.

Of course, foreign institutional investors (FIIs) have contributed their bit for this 'performance'. They have remained net sellers of stocks to the tune of Rs 11,463 crore, the maximum sold by them in any October, going by SEBI data. While domestic mutual funds have tried to put up a show by staying net buyers, this hasn't really helped the Sensex.

Even though the index is down by around 3,000 points this month, mutual funds have invested Rs 691 crore this month, their second-best effort since October 2005, when they had put up a whopping Rs 3,019 crore.

However, some have sensed an opportunity amidst this gloom and doom. Arun Mehra, manager of Fidelity India Focus Fund, says, "In fact, it is the perfect contra-play.

The issue of inflation that we have seen in India has been primarily driven by rising oil and commodity prices; India imports about 70% of the oil it consumes. As these prices begin to moderate, I would expect inflation to fall and the market to recover."